Everlast Co. manufactures a variety of drill bits. The company's plant is partially automated. The budget for the year includes $432,000 payroll for 4,800 direct labor-hours. Listed below is cost driver information used in the product-costing system:What is the total manufacturing overhead for the current product order if the firm uses a plantwide rate based on direct labor-hours?
A)$9,960.
B)$30,240.
C)$43,741.
D)$44,268.
E)$109,352.

Question

Everlast Co. manufactures a variety of drill bits. The company's plant is partially automated. The budget for the year includes $432,000 payroll for 4,800 direct labor-hours. Listed below is cost driver information used in the product-costing system:What is the total manufacturing overhead for the current product order if the firm uses a plantwide rate based on direct labor-hours?
A)$9,960. 
B)$30,240. 
C)$43,741. 
D)$44,268. 
E)$109,352.

Quizplus · Accepted Answer

To calculate the plantwide overhead rate, we divide the total manufacturing overhead by the total direct labor-hours:

Plantwide overhead rate = Total manufacturing overhead / Total direct labor-hours
Plantwide overhead rate = $288,000 / 3,200
Plantwide overhead rate = $90 per direct labor-hour

To calculate the total manufacturing overhead for the current product order, we multiply the plantwide overhead rate by the direct labor-hours required for the order:

Total manufacturing overhead = Plantwide overhead rate x Direct labor-hours
Total manufacturing overhead = $90 x 492
Total manufacturing overhead = $44,280

Therefore, the correct answer is (D) $44,268.